solar panel tax credit - hvac tax credit - window tax credit

This week, President Biden will sign the biggest climate bill in US history—a landmark event in the fight to reduce greenhouse gas emissions and avoid the worst effects of climate change.

One way the government aims to get there is by putting its giant thumb on energy markets so that cleaner options are more affordable to consumers. To see this strategy in action, look no further than the bill’s incentives that push America’s 122 million households to become lean, green, clean-energy machines.

The big picture: Buildings contribute 12.5% of total US greenhouse gas emissions, according to the EPA, so reducing their use of fossil fuels would contribute significantly to decarbonization efforts.

To that end, the bill provides about $100 billion for electrification programs at the neighborhood level, the nonprofit Rewiring America told Axios. If you’re a homeowner, here are some programs to know:

  • The Energy-Efficient Home Improvement credit: Households can claim a tax deduction of up to 30% for upgrades that save energy, such as updating electrical panels, adding insulation or more energy-efficient windows, and installing heat pumps (here’s what those are).
  • Residential Clean Energy credit: The bill resurrects and beefs up credit for homeowners installing renewable energy systems like rooftop solar panels. The incentives will cut the cost of a typical $20,000 solar installation by as much as $6,000, per the NYT.
  • Rebates for high-efficiency appliances: Low- and middle-income families can claim rebates up to $840 for a greener stove or oven and $8,000 for a heat pump for space heating or cooling.

Bottom line: Government incentives for clean-energy upgrades are not new. But by boosting the $$$ offered and extending credit programs for many years, the Biden administration wants to show Americans hurting from inflation that they can save money on their energy bills by going green. By taking environmentally friendly steps such as installing solar panels and buying a heat pump water heater, a household could save $1,800 annually, Rewiring America says.